The Oman Investment Authority (OIA) has released one of the most comprehensive disclosures of any Middle Eastern sovereign wealth fund, reporting an 8.8% annual return and total AUM of OMR17.9 billion (US$46.6 billion) in 2022, an increase of approximately 11%.
Three years after it was launched as a merger of the Oman Investment Fund and the State General Reserve Fund, the OIA reports that last year it contributed more than OMR5 billion in dividends to state coffers. This year, it set out to spent OMR1.9 billion (US$4.9 billion) on new investment projects.
The SWF has two portfolios: the National Development Portfolio (60% of assets, which are domestically oriented) and the Future Generations Fund (40% of assets, oriented towards international holdings).
The NDF includes Oman’s energy assets, including its national oil company OQ and Oman LNG. These chunky assets helped lift AUM and profits, thanks to rising global energy prices following the Russian invasion of Ukraine. A 68% rise in OQ’s revenue led to a doubling of its net profit, while Oman LNG’s net profit surged 126% on the back of 58% revenue growth. As a result of improved performance and production growth, the NDF’s profits exceeded OMR1.4 billion (US$3.6 billion).
The OIA has slashed the debt of its portfolio companies by 23.4% over the past two years with the payment of OMR2.8 billion in loans, of which more than OMR600 million (US$1.6 billion) was paid ahead of schedule. By end-2023, the debt of portfolio companies was OMR9.1 billion (US$23.6 billion) – and the OIA plans to reduce this by a third to OMR6.1 billion (US$15.8 billion) by end-2025.
Debt reduction will shore up profitability and make companies more attractive when divested. In November 2022, The Pearl REIF, a shariah compliant real estate fund, was successfully listed on the Muscat Stock Exchange – the biggest IPO on the Omani bourse for seven years, raising OMR23.3 million (US$60.6 million) and valuing it at OMR90.6 million (US$235 million). In 2023, the OIA is preparing six assets for divestment by the year-end.
Strategic joint ventures are a pillar of the OIA’s drive to support the government’s foreign partnerships, mostly with other SWFs. Bilateral ventures have been signed with Uzbekistan (US$200 million), Brunei (US$200 million), Vietnam (US$200 million), Qatar (US$649 million), Spain (US$220 million), Pakistan (US$36 million), and India (US$230 million in two funds). Altogether, these ventures total US$1.74 billion of investment commitments.
The OIA is helping drive the Oman Vision 2040 program through attracting foreign direct investment. The annual report claims the OIA has yielded OMR1 billion (US$2.6 billion) of inward investment commitments. A recent bilateral deal with Saudi Arabia’s Public Investment Fund (PIF) is looking to generate US$5 billion of investment, building on the work of the Saudi Omani Investment Company (SOIC). The MoU provides benefits and incentives for PIF and its portfolio companies. It was signed after SOIC closed its first investment in Oman as a 20% anchor investor in Abraj Energy Services’ IPO.
SOIC is not the only vehicle chosen for PIF’s investments. Last August, PIF invested US$300 million in Oman’s private equity infrastructure fund Rakiza. Rakiza is co-managed by OIA subsidiary Oman Infrastructure Investment Management and Equitix, and focuses on the renewables, power and water, social infrastructure, telecommunications, and transport and logistics sectors.
The Omani government is planning an SWF with US$5.2 billion in initial capital, the Oman Future Fund. The new fund is set to be a catalyst for foreign direct investment as well as domestic private capital. It will be under the management of the OIA, but approval for financing projects by the new fund will come from a joint team established by the OIA, the Ministry of Finance and “other parties”.